RAHUL KUMAR BANSAL,ROURKELA vs. ASSESSING OFFICER, INCOME TAX DEPARTMENT, DHANBAD

ITA 366/RAN/2025Status: DisposedITAT Ranchi25 September 2026AY 2018-1917 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal first addressed the legal grounds, specifically Ground No. 1 concerning "borrowed satisfaction" and initiation of proceedings under Section 147/148/148A. The Tribunal found no reason to interfere with the order of the ld. CIT(A), who had already provided categorical findings that the legal grounds raised by the assessee were not sustainable. Regarding the factual aspect, the Tribunal noted that the Assessing Officer made the addition based on a gross profit rate of 25% on purchases from M/s Iskon Steel Traders, which was found to be a non-genuine entity. This was done by following the decision of the Coordinate Bench of the Ahmedabad Tribunal in Vijay Proteins Vs ACIT, which was upheld by the Hon'ble Supreme Court. The Supreme Court, in the context of Vijay Proteins Ltd., confirmed the principle that when goods are not received from the stated parties but from a different source known to the assessee, and the assessee inflates expenditure through fictitious invoices, disallowing 25% of the purchase price is justified. Since the CIT(A) followed this precedent, the Tribunal found no reason to interfere with his order. Consequently, the appeal filed by the assessee was dismissed. No issue was expressly left undecided.

What were the facts?

The assessee, Rahul Kumar Bansal, is in appeal before the Income Tax Appellate Tribunal (ITAT), Ranchi Bench, against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated August 12, 2025. This order confirmed the reassessment order dated March 28, 2023, passed by the Income Tax Officer (ITO) under Section 147 read with Section 144B of the Income Tax Act, 1961, for the Assessment Year 2018-19. The reassessment proceedings were initiated based on information that the assessee had made purchases of ₹46,94,644/- from M/s Iskon Steel Traders, alleged to be a fictitious entity. The Assessing Officer added ₹11,73,661/- on account of bogus purchases, treating 25% of the total purchases as undisclosed income, following the decision in Vijay Proteins Ltd. Vs ACIT. The CIT(A) upheld the AO's action.

What were the issues?

1. Whether the proceedings under Section 147/148/148A of the Income Tax Act, 1961, were initiated on the basis of "borrowed satisfaction" without independent application of mind by the Assessing Officer, relying on risk management strategy, CBDT's INSIGHT module, and information from ADIT (Inv.)-3(2), Kolkata, and whether such information was baseless. 2. Whether the approval under Section 151 of the Income Tax Act, 1961, was granted mechanically without independent application of mind, and if the designation of the competent authority for sanction under Section 148A(b) was not mentioned. 3. Whether the findings in the impugned Appellate Order and the reassessment order are perverse and based on no legal evidence but on assumptions and presumptions. 4. Whether the addition of ₹11,73,661/- is illegal, arbitrary, and contrary to settled principles of law, and if the addition of 25% is on the higher side considering the Gross Profit ratio, with an alternative submission that only profit embedded in purchases can be added. 5. Whether there is a mention of the statutory provision under which the additions are made in the impugned order. 6. Whether the entire proceedings were carried out in gross violation of principles of natural justice, with adverse materials and statements not supplied and cross-examination not allowed. 7. Whether the assessee's contentions were considered in violation of Section 144B of the Income Tax Act, 1961, and if sufficient documents were submitted to establish purchases from M/s Iskon Steel Traders without dispute or further inquiry. 8. Whether the levy of Education Cess of ₹13,856/- is illegal and without authority of law. 9. Whether the levy of interest under Sections 234B, 234C, and 234D of the Income Tax Act, 1961, is illegal and without authority of law. 10. Whether the disallowance and demand of refund of ₹32,170/- is illegal and without authority of law. Assessee's Contentions: - Proceedings initiated on "borrowed satisfaction" without independent application of mind, relying on third-party information without verification, citing CIT Vs. Odeon Builders Pvt. Ltd. (SC) and Girdhar Gopal Dalmia Vs. UOI (Cal). The addition is based on no evidence, and adverse materials were not provided, violating natural justice. The addition of 25% is excessive, and only profit embedded in purchases should be considered. Refund withdrawal was mechanical and without statutory backing. Revenue's Contentions: - The ld. Sr. DR relied on the orders of the lower authorities.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 148A,Section 151,Section 144B,Section 250,Section 143(3),Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI RATNESH NANDAN SAHAY & SMT. RAJANI GUDURI

For Appellant: Ms. Ritika, Advocate and Shri Shubham Choudhary, Advocate
For Respondent: Shri Sandipan Khan, Sr.DR
Hearing: 10/09/2026Pronounced: 25/09/2026

PER: BENCH

1.

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi [in short, the ld. CIT(A)] dated 12/08/2025 for the Assessment Year (AY) 2018-19, wherein the assessee has raised following grounds of appeal: "GROUND NO.1 The proceedings under Section 147 ibid have been initiated on the basis of "borrowed satisfaction" based on risk management strategy of CBDT, INSIGHT module and information of ADIT (Inv.)-3(2), Kolkata without independent application of mind. Further, the said information per se is bas

The order continues below.

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